(FORTUNE Magazine) – Waiting for the recovery in business spending has been a bit like waiting for Godot. Lots of talk, plenty of anticipation, no action. For more than two years the corporate sector has been mired in what may be its worst patch since the Depression. But things are starting to improve.

While it's too early to know for sure whether we're seeing just a blip in business spending or a real recovery, there are encouraging signs. A leading indicator of capital spending has moved higher since the end of last year: Nondefense durable goods orders (excluding orders for aircraft, which tend to obscure the trend because they're so large) rose 0.6% in April, vs. the same month last year. Since December they've increased 4.4%. That might not seem like much, but when you consider that new orders were down 5% in 2002 and 14.2% in 2001, the revival looks encouraging.

Business confidence has rebounded strongly since the end of the war in Iraq and is now back to where it was at the start of the year, according to a weekly survey by Economy.com. Total inventories rose 4% in the first quarter, vs. 2002, while corporate profits increased at an annual rate of 4%. The stock market has rallied, and bond yields have tumbled, both positive signs for companies that want to borrow money. The improvement in technology spending that began a year ago has continued unabated: Business spending on high-technology equipment and software has now risen for five quarters in a row and is up 11.8% over that period. "Investment is slowly coming back," says Brian Nottage, an economist at Economy.com.

But while overall economic activity has stabilized since the war ended, it still hasn't picked up significantly. Despite a modest improvement in both the manufacturing sector and services, according to April ISM surveys, companies in most industries are still shedding jobs. The latest figures show jobs declining by 17,000 in May and the unemployment rate inching up to 6.1%. As long as the jobless rate is rising, consumers will remain cautious. That's especially true at a time when Fed chairman Alan Greenspan continues to warn about the possibility of deflation.

A business-spending recovery is so important because, to a large extent, what we've been through has been a business recession. (Obviously the millions of people who got laid off weren't exactly partying either, but rising incomes for everyone else kept consumer spending strong.) For all the encouraging signs, don't expect to see a big improvement in business spending until next year. Richard Rippe, chief economist at Prudential Financial, predicts a 2.9% rise in real capital spending in 2003, followed by an 11% jump in 2004--typical of what most economists are forecasting. That alone is unlikely to boost overall growth strongly in the second half of this year. But it is enough to differentiate us from the characters in Waiting for Godot: Our existential crisis won't last forever. --Anna Bernasek